Trustee Tracy Hope Davis said in a filing on Friday to the U.S. Bankruptcy Court in New York that American had not explained why that level of severance pay and "sweeping changes" to various employee pay programs were permissible under the bankruptcy code.

In related news, Tracy Hope Davis just got kicked out of all the good country clubs.

tenpoundsofcheese

Bankruptcy court is not bound by prior negotiations, contracts, solemn vows, or even the opinion of pay consultants.

Chapter 11 nulls all existing contracts and requires an almost unilateral re-write of obligations to creditors through the Chapter 11 plan, unless the case dismisses. Even provisions such as "survives bankruptcy" are null; the power of the bankruptcy court supersedes pre-petition agreements.

The objection on its face has merit; they are committing 20 mil that could be disbursed to unsecured creditors, and instead giving it to some guy who basically lost his job. The Trustee would be well within his powers to order a refund to be paid to creditors. They are lucky he has only objected and not filed a motion to force turnover.

tenpoundsofcheese:"because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.

Or, alternately "a surprisingly large number of supposedly intelligent people had previously agreed to allow him to make off with an absurd sum of money regardless of his actual performance, the performance of the company as a whole and even if it is detrimental to the continuing operations of the company". I don't see why they can't just be honest about it.

Sure, it was in his contract. I can guarantee you if there were a couple hundred soon to be laid-off run-of-the-mill employees who had clauses like that in their contracts (likely collectively equalling a whole lot less than $20 million) the company would be falling all over themselves trying to find ways to invalidate those contracts.

Linux_Yes:tenpoundsofcheese: "because he negotiated it as part of his compensation and the board agreed with it after consulting with third party pay consultants" is a good answer.

its a good answer, all right. but hardly a Solution.

Unless the contracts were from those union thugs that 'negotiate' for the workers. Those useless tits shouldn't the rights to even look upon the face of their glorious corporate masters who are benevolent enough to deign to allow them to work at their premises!

What's wrong with you looters? Ayn Rand would be ashamed of you. He's a CEO. He's a Rock Star. By the very definition of CEO in American business he deserves every penny he can get. Who do you hanger-ons think built this nation. When Atlas asked what he should do, shrug, I said.

A Shambling Mound:Sure, it was in his contract. I can guarantee you if there were a couple hundred soon to be laid-off run-of-the-mill employees who had clauses like that in their contracts (likely collectively equalling a whole lot less than $20 million) the company would be falling all over themselves trying to find ways to invalidate those contracts.

MindStalker:A Shambling Mound: Sure, it was in his contract. I can guarantee you if there were a couple hundred soon to be laid-off run-of-the-mill employees who had clauses like that in their contracts (likely collectively equalling a whole lot less than $20 million) the company would be falling all over themselves trying to find ways to invalidate those contracts.

Under the new bankruptcy laws, he isn't allowed to be given something that is more than 10 times the standard for that company's non-management employees. In this case, the mean severance package for AA would have to be something like $1.9million PER EMPLOYEE for him to legally be allowed to walk with $20m.